SAN FRANCISCO — (BUSINESS WIRE) — July 9, 2014 —
Asana, Canon, Dropbox, Google, Newegg and SAP today announced the
formation of the
License
on Transfer (LOT) Network, a cooperative patent-licensing agreement
that will cut down on patent troll litigation and the growing practice
of patent privateering.

Patent litigation reached an all-time peak last year, with more than
6,000 lawsuits filed. Most of those suits came from non-practicing
entities, also known as patent trolls—companies that don't have a
business outside of licensing and litigating patents.

More than 70 percent of the patents used by trolls come from operating
companies, according to RPX Research. Indeed, in a growing trend called
privateering, companies are selling patents to trolls that then use
those patents to attack other companies. In some cases, those companies
arrange to get a cut of revenue generated from the trolls’ suits.

The LOT agreement is a new kind of royalty-free cross-license meant to
address these growing systemic problems. Member companies receive a
license when the patents are transferred out of the LOT group. That
means that companies retain their right to enforce a patent so long as
they retain ownership of it. However, as soon as it is sold, a license
to the other members becomes effective, protecting them from attacks by
the troll to which the patent was sold.

The agreement includes several other provisions that preserve a patent
portfolio’s value, including carve-outs for certain M&A transactions and
change of control.

The initial members of the LOT Network range from early-stage startups
to established technology companies. Together they own almost 300,000
patent assets, generate more than $117 billion in revenue and employ
more than 310,000 people.

“The LOT Network is a sort of arms control for the patent world,” said
Allen Lo, Deputy General Counsel for Patents at Google. “By working
together, we can cut down on patent litigation, allowing us to focus
instead on building great products.”

“Startups need to overcome many risks before they can become mature,
thriving companies. The LOT Network is a powerful and creative new idea
that will help ensure that patent abuse need not be one of them,” said
Dustin Moskovitz, cofounder of teamwork software provider Asana.

“The LOT Network provides a unique mechanism for reducing patent troll
threats while maintaining a portfolio's primary significance and value,”
said Kenichi Nagasawa, Director and Group Executive of Canon Inc.’s
Corporate Intellectual Property & Legal Headquarters. “Through the
further expansion of the LOT Network, I look forward to the patent
system restoring its sound functionality.”

"We believe that patents should never be used to stifle innovation,"
said Brett Alten, IP Counsel at Dropbox. “The LOT network is a creative
solution to fight patent abuse that becomes more effective with each
company that joins. The more participants there are, the better off
we'll all be.”

“Newegg has a very strong history of successfully battling patent
trolls, and the License on Transfer Network is another valuable tool
that helps protect participants from frivolous patent litigation,” said
Soren Mills, Chief Marketing Officer of Newegg North America. “We’re
very happy to join forces with Google and other leading technology
companies to preserve the spirit of innovation that’s so vital to our
collective well-being.”

“The structure of the LOT Network helps protect innovative patent owners
from unwarranted litigation, without stifling valid, beneficial uses of
patents, such as cross-licensing,” said Anthony DiBartolomeo, Senior
Vice President and Chief IP Counsel at SAP. “As long as a company owns
their patent they retain all their rights to it.”